What is an education loan and how does it work?

An education loan is a secured or unsecured loan provided to students for financing higher education in India or abroad. The loan typically covers tuition fees, hostel charges, books, equipment, and travel expenses. Repayment usually begins after a moratorium period (course duration + 6-12 months grace period) with EMIs spread over 5-15 years.

How much education loan can I get for studying abroad?

For studying abroad, you can get education loans ranging from ₹20 lakhs to ₹1.5 crores depending on the country, university ranking, and course. USA/UK courses may get higher limits. Loans above ₹7.5 lakhs typically require collateral like property, fixed deposits, or third-party guarantee.

What is the current education loan interest rate in 2026?

Education loan interest rates in 2026 range from 7.75% to 13.70% depending on the lender. Public sector banks like SBI (8.15%), PNB (8.35%), and Bank of Baroda (8.15%) offer lower rates. Private banks and NBFCs charge 10-13%. Female students often get 0.5% concession.

What is the moratorium period in education loan?

The moratorium period is the time during which you don't need to pay EMIs. It includes your course duration plus a grace period of 6-12 months after course completion or 6 months after getting a job, whichever is earlier. Interest accrues during moratorium and gets added to principal (unless you opt for partial interest payment).

Do I need collateral for an education loan?

Collateral requirements depend on loan amount: Up to ₹4 lakhs - No collateral, no guarantor needed. ₹4-7.5 lakhs - Third-party guarantee required, no collateral. Above ₹7.5 lakhs - Collateral security required (property, FD, insurance policies, etc.).

What expenses are covered under education loan?

Education loans typically cover: Tuition fees and college deposits, Hostel and mess charges, Examination and library fees, Books, equipment, and laptop, Travel expenses for studying abroad, Student visa and insurance, Project work and thesis expenses, Caution deposit and building fund.

How to get tax benefits on education loan?

Under Section 80E of Income Tax Act, the entire interest paid on education loan is deductible from taxable income. There's no upper limit on this deduction. The benefit is available for 8 years from when you start repaying, or until full interest is paid, whichever is earlier. Only the person who took the loan (student or parent) can claim this deduction.

What is the difference between simple and compound interest in education loans?

Simple interest is calculated only on the principal amount, while compound interest is calculated on principal plus accumulated interest. During moratorium, if you opt for simple interest, you pay less overall. Most banks charge simple interest during course period and compound interest during repayment. Paying interest during moratorium can save 15-20% of total interest.

Can parents take education loan for their child?

Yes, parents can be co-applicants or guarantors for education loan. In most cases, the student is the primary borrower and parents are co-borrowers. For loans under ₹4 lakhs, parents alone can apply. Parents' income and credit score impact loan approval and interest rates. Tax benefits under Section 80E can be claimed by parents if they're repaying the loan.

What happens if I can't repay my education loan?

If you default on education loan: First 90 days - Late payment fees charged, reminders sent. 90+ days - Account becomes NPA, affects credit score significantly. 1+ years - Legal action may begin, guarantor contacted. For genuine hardship, banks offer: EMI restructuring, extended tenure (up to 15 years), interest rate negotiation. Always communicate with your bank early if facing difficulties.

Which bank is best for education loan in India?

Top banks for education loans in 2026: SBI (8.15%) - Largest lender, covers most countries. Bank of Baroda (8.15%) - Good for studying in UK/USA. PNB (8.35%) - Quick processing, good for domestic courses. Canara Bank (8.60%) - Competitive rates for engineering. HDFC Credila (9-11%) - Private option with faster approvals. Compare processing time, margin requirements, and customer service.

How to calculate education loan EMI with moratorium?

To calculate education loan EMI: First, calculate total interest during moratorium (Principal × Rate × Moratorium years). Add accrued interest to principal to get effective loan amount. Calculate EMI using formula: EMI = P × r × (1+r)^n / ((1+r)^n - 1). Example: ₹10L loan, 8.5% rate, 4-year course + 1-year grace, 10-year repayment = EMI of ₹15,600 approx.

EDUCATION FINANCE8K+ SEARCHES/MONTH

Education Loan EMI Calculator

Calculate your education loan EMI for studying in India or abroad. Plan your higher education financing with moratorium period, compare bank rates, and understand tax benefits under Section 80E.

✓ Study Abroad Loans•✓ Moratorium Period•✓ Tax Benefits (80E)

Loan Details

Loan Amount

Minimum loan amount is ₹10,000

₹

₹10,000₹1,00,00,00,000

Interest Rate

Supports 0% for interest-free loans.

%0%40

Loan Tenure

Minimum tenure is 1 Year

Yr1Yr30

💡

Reducing tenure saves significantly more interest than lower rates.

Monthly EMI

₹15,711

Total Interest

₹3,19,729

Total Payment

₹13,19,729

Loan Liquidation over time

Total Breakup

Principal

Interest

Popular Education Loan Scenarios

INDIAN COLLEGE

₹5 Lakhs

5 years @ 8.25%

Click to calculate →

MBA / PROFESSIONAL

₹20 Lakhs

10 years @ 8.25%

Click to calculate →

STUDY ABROAD (USA/UK)

₹50 Lakhs

12 years @ 8.25%

Click to calculate →

How to Use the Education Loan Calculator

Our education loan EMI calculator helps students and parents plan higher education financing, whether for courses in India or studying abroad. It accounts for the unique features of education loans including moratorium periods and tax benefits.

Step-by-Step Guide:

1
Enter Education Loan Amount: Input the total loan amount you need, including tuition fees, living expenses, and other costs. For studying abroad, typical amounts range from ₹20L to ₹1Cr.
2
Set Interest Rate: Adjust the interest rate slider. Education loan rates currently range from 7.75% to 13%. Check current rates from SBI, HDFC, or other banks for accurate calculation.
3
Choose Repayment Tenure: Select your repayment period after moratorium ends. Education loans typically offer 5-15 years tenure. Longer tenure means lower EMI but higher total interest.
4
Consider Moratorium Period: Factor in the moratorium period (course duration + grace period). Interest accrues during this time and adds to your principal amount.
5
Review Results: Analyze your monthly EMI, total interest payable, and complete payment breakdown. Use compare mode to evaluate different loan options from various banks.

Understanding Education Loans in India

What is an Education Loan?

An education loan is a specialized loan product designed to help students finance their higher education in India or abroad. These loans cover tuition fees, hostel expenses, books, equipment, travel, and other related costs. Education loans come with unique features like moratorium periods and tax benefits that make them attractive for students.

Moratorium Period Explained

The moratorium period is the time during which you don't need to pay EMIs:

Course Duration: Full period of your course (2-5 years typically)
Grace Period: 6-12 months after course completion or getting a job
Interest Accrual: Interest accumulates and adds to principal during moratorium